Basel Capital Framework: Basel Committee Outlines Updated Policy Agenda, Including Plans to Finalize Outstanding Revisions to Its Regulatory Reform Framework by the End of 2016

Sullivan & Cromwell LLP - November 20, 2015
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The Basel Committee on Banking Supervision (the Basel Committee) and its Chairman, Mr. Stefan Ingves, have recently outlined the Basel Committee’s plans to finalize “the Basel III reform package” and the next steps to address the “fault lines” stemming from two broad dimensions thus far unaddressed by the Basel III reforms: the way in which risk is measured—that is, reliance on banks’ own estimates of risk—and risk weighted-approaches that are “essentially the same as they were before the crisis.”

In summary, the Basel Committee plans to finalize, by the end of 2016, remaining post-crisis reform initiatives in three broad categories: (i) enhancing the risk sensitivity and robustness of the standardized approaches, (ii) reviewing the role of internal models in the capital framework, and (iii) finalizing the design and calibration of the leverage ratio and capital floors.